Short Interest Ratio vs. Short Interest

 

The short Interest ratio is a simple formula that divides the number of shares SHORT in a stock by the stock's AVERAGE DAILY TRADING VOLUME.  

SHORT INTEREST IS THE TOTAL NUMBER OF SHARESTHAT BEEN SOLD SHORT

WHAT DOEST IT MEAN?

  • The short interest ratio is a quick way to see how heavily shorted a stock may be versus its trading volume.
  • The short interest ratio indicates how many days it would take for all the shares short to be covered or repurchased in the open market.
  • The short interest ratio and short interest are not the same—short interest measures the total number of shares that have been sold short in the market.
  • News or events may impact trading volumes and make the ratio expand or contract, so it should always be compared with the actual short interest and trading volumes.

tAKE aWAY POINT:

both of this metrics will allow you to get a sense of what direction the market will take in terms of timing and movement. You can predict when or if a short squeeze is in the horizon.

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